Excessive Use of Fertilizers

Topic- Agriculture [GS Paper-3]

Context- High government subsidies are leading to excessive use of two fertilisers  i.e. Urea and Di-Ammonium Phosphate (DAP).

What is Fertiliser?

• A fertilizer is a natural or artificial substance containing chemical elements such as Nitrogen (N), Phosphorus (P) and Potassium (K) and it improves growth and productiveness of plants.
• There are 3 basic fertilisers in India i.e. Urea, DAP and Muriate of Potash (MOP).

Fertiliser Subsidy:

• The government pays a certain subsidy to fertiliser producers to allow farmers to buy fertilisers at below-market rates.
• The difference between the cost of production or import of a fertiliser and the actual amount paid by farmers is the subsidy portion borne by the government.

Subsidy on Urea:

• In India, urea is the most produced, imported, consumed and physically regulated fertilizer and it is subsidised only for agricultural uses.
• The Centre pays a subsidy on urea to fertiliser manufacturers on the basis of cost of production at each plant and the units are required to sell the fertiliser at the Maximum Retail Price (MRP) set by the government.
• The MRP of urea is currently fixed at the rate of Rs 5,628 per tonne.

Subsidy on Non-Urea Fertilisers:

• The MRPs of non-urea fertilisers are fixed by the companies.
• But the government has, in recent times, and especially with the global price surge post the Russia-Ukraine war, brought other fertilisers under the control regime.
• All Non-Urea based fertilisers are regulated under Nutrient Based Subsidy (NBS) Scheme.
• Examples of non-urea fertilisers are DAP and MOP.
• Generally Companies do not sell DAP at more than Rs 27,000 per tonne.

Related Initiatives for Fertilisers

Neem Coating of Urea:

• The Department of Fertilizers (DoF) has made it mandatory for all the domestic producers to produce 100% urea as Neem Coated Urea (NCU).

New Urea Policy (NUP) 2015:

• Objectives of the policy include-
  • To maximize indigenous urea production.
  • To promote energy efficiency in the urea units.
  • To rationalize the subsidy burden on the Government of India.

Policy on Promotion of City Compost:

• The government has approved a policy on promotion of City Compost, notified by the Department of Fertilisers (DoF) in 2016 granting Market Development Assistance of Rs. 1500/- for scaling up production and consumption of city compost.
• To increase sales volumes, compost manufacturers willing to market city compost were allowed to sell city compost in bulk directly to the cultivators.
• Fertilizer companies marketing city compost are covered under the shade of Direct Benefit Transfer (DBT) for Fertilizers.

Use of Space Technology in Fertilizer Sector:

• Department of Fertiliser has commissioned a three-year Pilot Study on “Resource Mapping of Rock Phosphate using Reflectance Spectroscopy and Earth Observations Data” by National Remote Sensing Centre under ISRO, in collaboration with Geological Survey of India (GSI) and the Atomic Mineral Directorate (AMD).

Issues Related to Fertiliser Subsidy

• Imbalance in Price of Fertilisers:

• • • The high subsidy on urea and DAP makes them cheaper for farmers relative to other fertilisers.
    • While urea is retailing at a fourth of the price of packed common salt, DAP has become far cheaper than other fertilizers.
    • The prices of the other fertilizers which were decontrolled have also gone up which has led the farmers to use more urea and DAP than before.

• Nutrient Imbalance:

• • The use of N, P and K in the country has over the last few years sharply deviated from the ideal NPK use ratio which was set at 4:2:1.
  • Urea and DAP contain more than 30% of a single nutrient.
  • Urea has 46% N, while DAP has 46% P and 18% N.
  • The resulting nutrient imbalance owing to their use, disproportionate to other, more expensive fertilisers, could have implications for soil health, which ultimately affect crop yields.
• Damage to Fiscal Health:
  • Fertiliser subsidies are consistently damaging the fiscal health of the economy.
  • Subsidized urea is getting diverted to bulk buyers or traders or even non-agricultural users such as plywood and animal feed makers.
  • It is being smuggled to neighbouring countries such as Bangladesh and Nepal.

Way Ahead

• Considering that all three nutrients namely N (nitrogen), P (phosphorus) and K (potassium) are critical to increasing crop yields and quality of produce, the government should necessarily go for a uniform policy for all fertilisers.
• In the long run, NBS itself must be replaced by a flat per-acre cash subsidy that could be used to purchase any fertilizer.
• This subsidy should include value-added and customised products containing not just other nutrients but delivering even nitrogen more efficiently than urea.

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